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On The Call: HP CEO on 3Com acquisition

SAN FRANCISCO — One area where Hewlett-Packard Co. is expanding aggressively is computer networking, the home turf of market leader Cisco Systems Inc. Earlier this month HP announced plans to buy Cisco competitor 3Com Corp. for $2.7 billion to supplement HP's own line of networking gear.

The move is part of HP's push into more profitable areas than personal computers, which supply a third of HP's revenue but only 15 percent of its operating profit, numbers that continue to shrink as PC makers cut prices and consumers move toward inexpensive little laptops called "netbooks."

On a conference call with analysts Monday to discuss HP's latest quarterly earnings, CEO Mark Hurd talked about the company's networking strategy.

QUESTION: Can you talk about the 3Com acquisition and provide your thoughts regarding strategy and any future acquisitions?

ANSWER (Hurd): We've had a strategy around converged infrastructure for some period of time. That for us is the ability to give customers the opportunity to see servers, storage and networking all sort of working together in a common capability that we can deliver to customers either as a service or directly to them … Networking is certainly a key component of that strategy, and as you know we've been out in the market with ProCurve for the past couple of years and had very strong growth with ProCurve, strong share gains … I think the number one thing we get back from customers is they'd like for us to do more and have a broader portfolio with more capabilities, leveraging the strategy I described."